Us Treasury bonds, which had rebounded strongly overnight, tumbled in early Asian trading on Thursday.
Two-year yields rose 12bp to 3.31%, five-year yields rose 10bp to 3.47% and 10-year yields rose 8bp to 3.36% at press time.
Overnight, the Fed aggressively raised interest rates by 75 basis points with a strong commitment to lower inflation, and Mr Powell said a single 75 basis point increase was too big to be normal policy.This statement significantly weakened market expectations for another 75 basis point rate hike next month, and US Treasury yields rebounded strongly overnight, with yields of all maturities falling sharply by double digits:
The 10-year yield fell nearly 19 basis points on the day, losing 3.3 percent, down from a 2011 high of 3.48 percent hit on Tuesday.
The 30-year bond yield was down nearly 11 basis points to 3.32 percent, inverting the 10-year curve.Two-year Treasury yields, which are more sensitive to monetary policy, fell more than 24 basis points to their session low of 3.20 percent.The five-year yield fell more than 22 basis points to 3.38 percent.
Treasury yields have collectively jumped sharply since Friday’s CPI data burst again, sending prices down one of the steepest declines in decades, and it is unclear whether the overnight rebound can be sustained as concerns about sharply slower economic growth, rising price pressures and higher interest rates continue to hang over the market.
In addition, as the Federal Reserve starts to shrink its balance sheet, the volatility of the US bond market has risen sharply recently, while market liquidity has been rapidly declining.
Blackrock’s fixed income department chief investment officer Rick Rieder told the media, said the fed over the past two years has always been a big buyer, play an important effect on the stability of market, “lose these, coupled with uncertainty about inflation and growth, means that the interest rate market volatility will be high, far higher than we have seen over the past few years.